Reply to New Car Loans -- What Are Good Rates

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]We just bought a new BMW yesterday and got $1000 off plus a 60-month loan at 2.99%.[/quote]

I can't believe you are bragging about a 5-year car loan, particularly on a BMW, with its reliability statistics.  Good lord.  [/quote]

Who is bragging? We’ve owned BMWs for decades and have never encountered any significant problems or issues. This is propaganda spread by owners of Toyotas, Hondas, and similar shïtbox cars and SUVs in a vein attempt to throw shade at the more elite brands.

Further, HYSA rates are still close to 5%. Only a moron wouldn’t take advantage of a 5-year 2.99% fixed rate loan. [/quote]

You do not come out ahead by taking the loan after accounting for additional insurance costs and taxes. You cannot buy liability only insurance when you have a loan on the car. You are spending a minimum of an extra $500 a year on car insurance due to this car loan. Then you pay income taxes on the interest from a HYSA. If you income tax rate is relatively low that 5% is equal to a 3.75% yield after taxes. Under the most optimistic assumptions, the spread between your HYSA rate and the car loan rate is 0.76%, so you would need to have a car loan balance of 65k to break even for wasting $500 on extra insurance coverage. Any car that cost 65k+ will cost more than an additional $500 to insure with full coverage. Conclusion, borrowing money for cars makes you poorer. [/quote]

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